Sharply rising operating costs and increasingly intense market competition in China have prompted many Taiwan businesses operating there to relocate their operations to Southeast Asian countries to explore better production conditions and market sales over the past few years. Among the countries, Indonesia has been widely deemed by Taiwan enterprises as a market hard to tap due largely to language barriers and cultural differences.
Nevertheless, some Taiwan companies still have successfully built a solid presence in Indonesia with their niche products. Among them is Trans Electric, a Taiwan supplier of PX-branded multimedia accessories and consumer electronics, which has managed to command a 70% share of Indonesia's chain-store market for digital antennas within three years. In his interview by Digitimes, CH Liu, general manager of the firm's branch office in Indonesia, gave an insight into the Indonesian market and shared his recipes for tapping the market.
Q: Why did Trans Electric decide to set up a branch office in Indonesia? Has your company granted you full support?
A: It's increasingly difficult for us to maintain viable sales in Taiwan's domestic market, while profit margins from exports to the US and Europe have also declined year on year. Accordingly, Southeast Asia has naturally become our choice, as India is too far away and we know little about its market. Our boss finally picked Indonesia, the most populous nation in the region, as the location of our foothold in Southeast Asia.
In 2013, I came to Indonesia for a market inspection tour, and then presented a market analysis report to our company's CEO. He finally put me in charge of developing the market, telling me, "Just go as long as you are 30% confident of a successful development there. I have prepared US$4 million for you." Our CEO did make a rare decision on granting full support to a professional manager in developing sales abroad. He hoped I could achieve profitable operation in Indonesia within three years, but also told me, "Running a startup is not so easy."
Q: Did you encounter any difficulty after coming to Indonesia initially?
A: Of course, yes. Initially, we just wanted to locate sales agents in Indonesia, but we found large-sized sales agents always turning their noses up at us while small ones could hardly reach agreements over sales prices and volumes and even demanded exclusive agency rights. Finally, we shelved the sales agent program, and started to approach chain stores and shopping malls for direct sales. But after I found that a digital antenna was generally sold for only IDR50,000 (around NT$115 or US$3.8), much lower than the unit production cost of NT$300 for our antennas, I felt quite frustrated for a while.
Q: How did you get a turning point?
A: I hit snags in the first six months after my arrival in Jakarta. But I thought of the possible serious consequences that no others would dare to come to Indonesia if I fail here because I had maintained top sales records in our domestic market in Taiwan for over 10 years. So, I told myself that I was the starting pitcher and might also be the last pitcher, without any relief pitcher, and should therefore find a way out.
I exchanged over 1,000 business cards with potential customers in the initial six months, as I visited some 20 sales channels per day. I tried not to deal with people from Taiwan and moved to make friends with native Indonesians. Such efforts have paid off, as our digital antennas have scored over 70% in the chain-store market share in Indonesia.
Q: How did you make it? What is the most crucial key behind the success?
A: I started out by making forays into e-commerce platforms that usually bear lower entry levels but higher profitability, then I managed to tap into modern sales channels such as chain stores and shopping malls, and now at the third stage, we are beginning to comprehensively extend our sales tentacles to traditional sales outlets. Now in Jakarta alone, our products are available for sales at over 500 sales points, and some 70 shopping malls.
The prices of our digital antennas are three times those of their China counterparts, but we have successfully captured a 70% share of the chain-store market. Why? This is because we have managed to achieve No. 1s in signal reception quality, services, and exterior designs of our antennas. While other antenna brands fail to offer service phone numbers and websites, we have made sure that consumers can easily locate us whenever needed. I told my office staffers to put consumers on the top place, pick up telephones immediately to render consumers the best services, and allow them to have replacement for antennas they complain about.
Furthermore, when rejected by sales channel operators initially, I still instructed them on the importance of getting our company's digital antennas, reasoning that all the TV systems around Indonesia will be digitalized soon, and many households will demand such antennas. I also stressed that with our PX-branded digital antenna, TVs can receive as many as 30 channels with quality better than offered by other brands. This way, we successfully persuaded them that although our antennas are more expensive, they deserve the prices.
Q: What is the biggest difference between Indonesia and Taiwan in terms of personnel management?
A: In personnel management, much attention should be paid to cultural differences. In Taiwan, we could directly scold employees in case they commit any wrongdoing. But employees here show very strong self-esteem, and if you scold them today, they might quit tomorrow. Further, they might have bad memory, as they could even forget how much year-end bonuses they received last year.
During my first year here, I suffered many mistakes, leading to a 100% employee turnover rate. After a thorough self-reflection, I realized that I tended to arm myself with my authority as I felt a strong sense of insecurity soon after I came to Indonesia due to language barriers and unfamiliarity with local environments. But later I found they were quite friendly and easy-going and so tried to embrace them and win their hearts. Now, we get together very well like a big family, with family members of employees often invited to join dinner parties hosted for them.